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Meet the Italian music entrepreneur who went from being hired to hiring in Sweden

In 2007, guitar-maker Michele Benincaso found himself in the first generation of music tech entrepreneurs moving to Stockholm. Now he’s at the helm of the award-winning startup company, MIND Music Labs, and hiring music tech talent from all over the world just four years after launching.

Meet the Italian music entrepreneur who went from being hired to hiring in Sweden
Michele Benincaso. Photo: MIND Music Labs

Italian national, Benincaso began his career studying at the prestigious Antonio Stradivari School of Violin Making in Cremona, Italy. He worked building guitars for many years before taking a leap of faith and moving to a country he previously couldn’t locate on a map.

“I wanted to change everything in my life. I wanted to go to a place I knew nothing about. I was fascinated by the Nordic countries and I’d never visited Sweden before,” he says.

He explains that he didn’t know whether he would end up staying for weeks or years.

“I was around 30 years old and just thought, ‘why not?’ I had two one-way tickets: one for me and one for my guitar.”

His journey, however, wasn’t always so straightforward. When Michele arrived, he spoke neither Swedish nor English, so the innovator tried an unorthodox method to find work.

Michele wandered around the city with a photograph of his guitars, seeking out a business that was keen to work with him. After a couple of days, he ended up in the largest guitar store in Sweden.

“I presented what I was working on, I said ‘Look, I build these guitars, I come from the Stradivarius School and I would like to work here’. I had my 10-second pitch and I was not able to say much more because my English was really bad!” he recalls.

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Luckily, his qualifications spoke louder than words and he was offered a freelance position.

Taking the first step

In order to begin work as a freelancer, however, Michele was required to start his own company. Luck was on his side and he soon made some connections with others in the industry who advised him to go to the Swedish Tax Agency (Skatteverket) to register himself as a sole trader (enskild firma).

The process, he recalls, was extremely simple.

“That was my first step as an entrepreneur in Sweden. I considered it very, very easy,” he says.

It was just the beginning of Michele’s entrepreneurial journey. With a keen interest in music tech and after months of late nights spent in the basement of his apartment, experimenting with tech devices and sensors, MIND Music Labs was launched in 2014. The aim was to create the guitar of the future.

SENSUS Smart Guitar. Photo: MIND Music Labs

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Michele quit his job at the guitar store and worked for a year for free, whilst finding talented employees to join the team.

Building the team

He says the hiring process is relatively simple. The first step is to register yourself as an employer with the Swedish Tax Agency (Skatteverket). Once registered, you can begin to hire staff, including yourself.

Each month you will deduct and report taxes on behalf of your employees and pay social security contributions on their salaries.

The Swedish Public Employment Service (Arbetsförmedlingen) offers a free support service, including advice and assistance with recruitment. In some cases you can even receive financial support during the hiring process.

Once the MIND Music Labs team had been formed, they began work on their award-winning ‘SENSUS Smart Guitar’ but soon realised that the software had to be created from scratch. In order to do that, they needed to develop a full music operating system.

Michele says their ELK music operating system is the music tech equivalent of what Android is for mobile.

“It’s a platform that can run in different musical instruments which makes it very easy for a developer to build apps and for a user to upgrade and connect.”

ELK Operating System. Photo: MIND Music Labs

As the scope of the company grew, so did the team. After securing initial investment Michele was able to build a prototype and hire himself and a couple of extra team members.

Becoming an employer

“The hiring was not easy at all. The main reason is that in Sweden there are a lot of people working with technology, but we are a very specific segment. It’s music and technology,” says Michele. “We’ve only got one Swedish guy and the rest are from elsewhere in the world, because it’s so hard to find exactly the profile we needed.”

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Things became increasingly difficult when he began to hire engineers from outside the EU.

Michele recalled reading about employees of music tech heavyweight Spotify being forced to leave Sweden just a few months earlier as a result of work permit issues. It was only when he found himself in the same situation that he understood the disruption it can cause.

“We had a huge work permit issue with one of our developers. He had all the documentation in place, he was fully hired, he did his master’s thesis with us, everything was in order, but he had to go back to India in January. Now he’s finally coming back,” he says.

He believes startup companies should be given more consideration in these situations.

“It’s a huge problem for us as a startup to have one of our key employees not working.

When you have five people developing and one of them who is a core developer has to move to the other side of the world for four months, it doesn’t make things easy at all,” Michele adds.

He offers a word of advice for employers looking to source their talent from outside the EU.

“Before hiring someone that is not an EU citizen, you need to check everything. Get that information before starting the process because you can easily find yourself in a situation where you end up without one of your core employees and there was nothing we could do but wait,” he says.

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He attributes a lot of what he’s learnt to the tight-knit, sharing startup community in Sweden.

“The startup network has the knowledge and probably 80 percent of questions are the same for everybody. You need to go through the registration and hiring process. There is a path that is common for every company so if you develop a network, sometimes it’s just easier to have a coffee with someone and ask them for advice,” he explains.

He says that, now that he’s been through the process, he isn’t as phased about hiring international talent.

“We are definitely less scared if we need to hire someone who is not from the EU. Still, it’s not straightforward but at least we know the path. If anyone needs some tips for hiring outside of the EU I am always happy to give advice.”

This article was produced by The Local Creative Studio and sponsored by verksamt.se

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PROPERTY

EXPLAINED: Will Swedish housing prices plummet as interest rates rise?

The Swedish financial supervisory authority warned on Wednesday that rising interest rates could lead to house prices falling "quite sharply". How likely is it that this will happen?

EXPLAINED: Will Swedish housing prices plummet as interest rates rise?

What financial circumstances might make it difficult for borrowers to repay loans?

With an increase in the cost of living, including rising interest rates and rising electricity prices, there are plenty of circumstances that may make it difficult for borrowers – especially those holding large debts in relation to their income – to repay their mortgages.

Households with large debts are therefore more sensitive to an increase in interest rates, according to the Swedish financial supervisory authority, known in Swedish as Finansinspektionen (FI).

The agency published its annual Swedish Mortgage Market report on Wednesday.

“Large debts also mean a higher sensitivity if you were to suffer unemployment during an extensive recession,” said Henrik Braconier, the authority’s chief economist.

Other factors that could stretch borrowers’ finances include rising energy prices, higher food prices, and growing inflation.

“Apples, oranges, tomatoes have gone up by 30 percent,” said Américo Fernández, a household economist at SEB. “Wheat is coming from Ukraine and it’s getting harder and harder to get hold of.”

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Will homeowners become unable to repay their mortgage loans?

Not according to Fernández.

“One of the last things Swedish households will fail to make their payments on is their mortgage and their houses,” he said. “They would rather decrease their spending on vacations abroad, or restaurants.”

The FI report noted that most new mortgages include margins that allow for fluctuations in the borrower’s finances. This means that mortgage holders have a cushion that allows them to handle financial changes.

“Our stress test shows that they can handle increases in the interest rate and also loss of income,” said Magnus Karlsson, FI’s director of macroanalysis. “New mortgages have margins in them calculating discretionary income, and will be able to absorb increases in interest rates and loss of income.”

SEB foresees an interest rise of up to three percent over the next two years, Fernández said,an increase that can be absorbed by most households.

Both Fernández and Karlsson agreed that if homeowners have to cut back on spending, those cuts will not come from debt repayment, but from their disposable income – the money they might ordinarily spend on entertainment, eating out, or travelling.

So while household spending may have to change, financial stability is not at stake for most households.

What’s going on with the housing market?

Right now, a record number of mortgage-holders have loans that are worth more than 4.5 times their income. This year, more than 14 percent of new mortgagors took on such large loans, compared to 6.3 percent last year.

A “low interest rate, increase in housing prices, increase in disposable real income and a housing market that is not functioning well” are all factors in the large debts that homeowners have incurred today, Karlsson argued.

Fernández noted that there is an imbalance between the low supply of housing and the high demand for housing, which is in part responsible for the high housing prices we see today.

He said a decrease in price of a few percentage points would not be surprising: “We’re coming from two years of exaggerated prices.”

Will housing prices begin to decrease after two years of increasing prices?

Calculations for three different scenarios tested by FI show that housing prices will decrease, Karlsson said.

While the agency does not predict housing prices, its report shows that under three different scenarios – the first an increase in mortgage interest rate, the second an increase in energy prices, and the third a combination of the first two with a reversal to pre-pandemic housing preferences – prices will decrease.

The Local Sweden reported last year about increasing housing costs in Sweden, spurred on in part by a desire for bigger homes further away from urban areas during the COVID-19 pandemic.

Fernández called the two years of increasing housing costs “surprising.”

“10-12 percent two years in a row, that’s historical in these uncertain times,” he said, noting that prices were still increasing in figures for March this year.

What sorts of housing will see the largest price decrease?

The FI report also included various scenarios of how the price of different types of housing may fluctuate based on changes in the interest rate.

One scenario assumed a 1 percent increase in interest rates this year and a 0.5 percent increase next year, and predicted that while the price of apartments owned in a cooperative – called bostadsrätter – would fall only slightly, the price of detached houses would fall by 10 percent.

Another calculation that accounted for rising electricity prices and a decline in new housing purchases found that the price of bostadsrätter and detached houses risked falling by an average of 30 percent.

Is there a plan to let borrowers end their mortgage terms early?

“We believe it needs to be simpler and more inexpensive for households to repay their mortgages early,” FI Director General Erik Thedéen is quoted as saying in a press release published by the agency on Wednesday.

To that end, Thedéen said at a press conference that the agency had sent a request to the government to change the calculation model for how banks are compensated when mortgages are terminated early.

“When you terminate a loan agreement and the bank incurs costs, it must be reimbursed,” Thedéen said. “But at present the banks are overcompensated, that is what our calculations show. If the government follows our line and changes the model and follows our line, then the banks must simply adapt.”

When asked about the likelihood of this request being granted, FI recommended reaching out to the Ministry of Justice for comment.

What does this mean for foreigners in Sweden?

If you’re already a mortgage holder, then as Karlsson and Fernández assured, mortgage calculations include a cushion that allow for changes in your financial circumstances.

If homeownership is in your future, housing prices may begin to decrease in the near future, so it’s worth keeping an eye on your local real estate listings.

By Shandana Mufti

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